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T.G.K. Raman (Huf) Vs. Commissioner of Income-tax and - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C. Petition Nos. 74 to 80 of 1981
Judge
Reported in(1982)26CTR(Mad)440; [1983]140ITR876(Mad)
ActsIncome Tax Act; Wealth Tax Act
AppellantT.G.K. Raman (Huf)
RespondentCommissioner of Income-tax and ;commissioner of Wealth-tax
Appellant AdvocateS.V. Subramaniam, Adv.
Respondent AdvocateJ. Jayaraman, Adv.
Excerpt:
.....that even if the thing might not be recognised as a partial partition, yet it may be seen as a gift of shares by him as the kartha, to himself in his individual capacity was also rejected. reference applications were also dismissed. the matter was brought to the high court by the assessee for directing the tribunal to state a case on the following two questions:-- ; (i) whether there was a partial partition in the assessee's family and wheather the tribunal was right in ruling out the partition pleaded in the circumstances of the case,; (ii) wheather failing partial partition of the property in question, there was at least a gift of such property. ; held, the position argued for cannot be accepted even under the most ultra modern doctrine of mistakshara joint family. the family in..........that even if the thing might not be recognised as a partial partition, yet it may be seen as a gift of shares by raman, as the karta, to himself in his individual capacity. this contention was also rejected by the tribunal as untenable.5. references were then taken by the assessee before the tribunal on the two questions earlier mentioned, namely, whether the tribunal was right in holding that there was no partial partition in law, and, alternatively, whether the assessee's manner of dealing with the shares cannot be construed as a gift by the family, as such, to raman as an individual coparcener. the tribunal, however, dismissed the reference applications on both the questions.6. the matter has now been brought to this court by the assessee for directing the tribunal to state a case.....
Judgment:
1. In this group of tax case petitions, the assessee asks for a reference on two questions. They are:

"1. Whether there was a partial partition in the assessee's family and whether the Tribunal was right in ruling out the partition pleaded, in the circumstances of the case

2. Whether, failing a particle partition of the property in question, there was at least a gift of such property ?"

2. The facts on which these questions have been mooted are vary few. The assessee is charged to tax both under the I.T. Act and under the W.T. Act in the status of an HUF. The karta of the family is one Raman. The family consist of the karta, his wife and there daughters. There is no male issue. There is no other male coparcener in the family. It was claimed before the department than on March 28, 1974, there was a partial partition in the family. It was said to be limited to a portion of the family properties. The family estate included, among other properties, 4,040 equity shares in a company called Engine Valves Ltd. The said share were said to have been allotted under the partition to Raman, the karta, while the rest of the properties continued to remain joint family properties. The evidence of this so called partition was and affidavit sworn to by Raman before a notary public. The stand taken was that although there was no other male coparcener in the family, Raman as the karta, was entitled to effect a partition and allot any item of property to himself.

3. The assessing officers rejected this contention. On appeal, the Tribunal also had no hesitation in rejecting the claim for partial partition as invalid.

4. With the claim for the partition negatived in this manner, the assessee urged that even if the thing might not be recognised as a partial partition, yet it may be seen as a gift of shares by Raman, as the karta, to himself in his individual capacity. This contention was also rejected by the Tribunal as untenable.

5. References were then taken by the assessee before the tribunal on the two questions earlier mentioned, namely, whether the Tribunal was right in holding that there was no partial partition in law, and, alternatively, whether the assessee's manner of dealing with the shares cannot be construed as a gift by the family, as such, to Raman as an individual coparcener. The Tribunal, however, dismissed the reference applications on both the questions.

6. The matter has now been brought to this court by the assessee for directing the Tribunal to state a case on those two questions. Mr. S. V. Subramaniam, for the assessee, submits that there can be no denying that an HUF is in existence in this case even though there is but a solitary male member, all the rest being females. From this position, learned counsel proceeds to argue that the karta of a joint family who is also the father in the family has every right to bring about a partition, either of the whole or of part of the family properties. It was accordingly urged that there was nothing invalid about a partition which takes the form of the karta allotting to himself some family properties.

7. The position argued for cannot be accepted even under the most ultra-modern doctrine of Mitakshara joint family. The family in this case is joint or undivided, only in a manner of speaking. There is a solitary male member who is the head or karta of the family. No other coparcener exists in the family entitled to any share in any partition of the family. The karta's wife and his daughters are not entitled to any shares. There can be a partition only between two coparcener or more, not between two capacities of one and the same coparcener, as in this case. It is wholly artificial that Raman should go through a process of partition of this kind to obtain for himself title to the company shares, when even without it his absolute dominion over the shares and other properties is unquestioned, since he happens to be the only coparcener in the family. The Tribunal was hence right in holding that there was no partition which could be brought about by the assessee under the law, either in the manner adopted or in any other manner.

8. Mr. Subramaniam, however, submitted that although this might be the law's anger to the question of validity of this partition, yet it cannot be gainsaid that the question itself is a question of law. He reminded us that the present inquiry before the court is limited only to finding out whether the question is one of law.

9. We are, however, not persuaded that the question, although one of law, is of such a kind that this court should call upon the Tribunal to state a case. Learned standing counsel for the department brought to our notice a ruling decision of this court in V. V. S. Natarajan v. CIT [1978] 111 ITR 539, in which it was held that there can be no partition of a Mitakshara family where it is purported to be effected as between two different capacities of the same individual coparcener. With this direct decision which concludes the matter in this case, we do not see our way to direct the Tribunal to state a case on this question.

10. The second question mooted by the assessee reflects an idea which, if anything, is more artificial than that of a partial partition. Even the record does not favour such an idea. There is the solemn affidavit sworn to by the assessee before a notary public that there has been a partition and allotment of the shares. That affidavit must rule out any idea of a gift of the said shares. It takes two to make a gift, a donor and a donee. Besides, a gift must involve, always, a transfer of the thing gifted. Before the transfer the done will be nowhere in the picture. He win become the owner of the property gifted only because of the transfer of ownership involved in the gift. A partition, on the other hand, pre-supposes a commensality of interest in the property in question even in its undivided state. Everyone of the shares has a pre-existing interest in the property. A partition thus involves no transfer, as it does not confer a new title to the person to whom the property so allotted which he does not already possess in that property. These being the respective legal characteristics of a partition, on the one hand, and a gift, on the other, what fails as a partition can by no means emerge as a valid gift.

11. The argument of Mr. Subramaniam is that the deference in the legal attributes between a partition and a gift is itself enough to raise a question of law in this case.

12. We may agree that what is involved in this discussion is not a question of fact, but a question of law. Even so, the differences between a partition and a gift are so glaring and self-evident, that the question has only to be stated to be rejected. In such cases, the High Court will not, for mere form's sake, call for a reference from the Tribunal. The mechanism of the a case stated is not intended to be an idle pastime of an academic exercise, but a purposive proceeding. The court will compel a Tribunal to refer a question of law only to get a case stated with some substance in it. Where the controversy bids fair to be either academic or futile, as in this case, this court has the power and the duty to scotch the attempt to get a case stated even at the early stage. We, therefore, see no reason to direct a reference from the Tribunal on the second question as well.

13. In the result, all the petitions are dismissed. The Department will have its costs from the assessee. Counsel's fee Rs. 250, one set.


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